Real estate sales rebound in Salt Lake City - Inman.com

Still, Utah's state capital and largest metropolitan area continues to experience falling home prices and a glut of distressed properties. Homes for Sale In Salt Lake City, more than 1 in 4 homes with mortgages were either underwater or close to being upside down with negative equity in the second quarter of 2011, according to CoreLogic, a Real Estate research firm. This report highlights real estate market statistics and trends in the Salt Lake City metro area and includes a chart with detailed market data and commentary from local real estate professionals. Statewide, the median sales price fell 12 percent to $175,268 in July, according to the Utah Association of Realtors. Pending sales, or those under contract, climbed 37. Real estate experts attribute the summertime surge to consumers encouraged by an improving local economy in the past year, record-low interest rates and falling home prices. Realty board officials are projecting a 12 percent increase in year-end sales. Foreclosure activity remains a significant factor, with distressed property sales by most estimates representing about a quarter of all sales. In July, there were 7,009 homes on the active market in the region, down 20. Local real estate professionals say many homeowners are opting to remodel their current homes or are waiting for prices to firm up before putting up the for-sale sign. However, realty board officials consider the low inventory a positive sign. Area home prices have declined annually since peaking at $220,599 in 2007. Salt Lake City home values are faring better than the rest of the state and the nation as a whole. Experts predict the price decline will continue through the winter, and by March 2012 home prices are forecast to be down 2. But Fiserv analysts anticipate that prices will rebound in the following 12 months, increasing 2. Like other growth markets in the 2000s, the Salt Lake City market was hit hard by the foreclosure crisis. Last year, one in every 27 homes received a foreclosure notice in the Salt Lake City area, which ranked 34th among major U. During the second quarter, 1 in 5 homes with mortgages (45,180) in Salt Lake City were underwater, meaning the borrowers owed more on their mortgages than their homes were worth, according to CoreLogic. Another 6 percent, or 13,622 homes with mortgages, were near negative equity. Overall, Utah ranked 13th highest nationally, with a rate of 20. Real estate brokers estimate distressed properties today account for close to 40 percent of the active listings. Thomas doesn't expect the distressed properties to further erode home values. They (lenders) are trying to do more loan modifications and short sales. Still, Utah's foreclosure rate -- 1 in every 450 units -- ranked 10th highest in the nation. One positive sign for the housing market: The average sales price of bank-owned homes rose in the second quarter to $208,909, up 3 percent from the year-ago period, according to RealtyTrac. By comparison, the average sales price for all homes in July was $222,009, SLBR statistics show. Nationally, the average sales price for bank-owned properties fell 4. It all goes back to people having confidence in the market and optimism moving forward. Home sales followed a steady upward track from 1997 through 2005 and 2006 -- when sales those two years topped 23,300 units. Sales then plunged 23 percent in 2007 and dipped another 1. Dubbed the "Crossroads to the West," Salt Lake City should be in a good position to take advantage of the housing turnaround. As host of the 2002 Winter Olympics, the region is well-known for its world-class ski resorts and as the gateway to renowned national parks. It has highly regarded universities and a young, educated workforce that has attracted such high-tech companies as eBay. Clearly, the recession and foreclosures have hurt housing sales. In 2009, for example, Salt Lake County lost 30,000 jobs -- nearly doubling the area's jobless rate -- and had more people moving out than moving into the county for the second straight year. Since then, migration returned to the positive side, with the region netting an additional 1,100 people a year. Another encouraging economic sign is projected job growth. The Salt Lake Chamber forecasts employers will hire 13,100 extra workers this year and create 14,100 new jobs in 2012. That bodes well for the economy and the housing market. Q-and-AInman News asked some area real estate professionals to comment on the latest market trends in the Salt Lake County metro housing market. I would actually say (it's) more like the $225,000 price range and below. Active homes on the (multiple listing service) show 4,622 single-family Homes for Sale in Salt Lake County. Money is still tight for a lot of consumers and competition amongst sellers is fierce. Investment properties and commercial (properties) remain soft. An interesting fact I found is that of all 8,713 single family sales, the $400,000-and-above market made up less than 10 percent of the whole year's sales. The segment between $750,000 and our highest-recorded sale of $3. The high-end homes are on the market for 205 days, on average. Single-family residential sales have totaled 7,544. Many of the homeowners associations are struggling because of nonpayment. As always, homes that are priced well and in the best condition sell fast, especially in the market under $300,000. The sellers who have equity (have been in their home five-plus years and have not recently refinanced) are able to compete with the short sales and REOs on the market. The potential sellers who do not have enough equity are choosing to stay put. Buyers are continuing to struggle to qualify for financing. The pool of buyers who are qualified is small compared to the pool of homes for sale. The buyers who do qualify know that they can get a good deal, and that's what they are looking for. However, with a great workforce, universities and fair wages, we are experiencing some in-migration in the technology sector and some expansion of companies to Utah. The next big change is the amount of cash in the market. Approximately 15 percent of this year's transactions have been all-cash. Investors and professional rehabbers have been doing very well in this market. I have personally experienced multiple-offer scenarios on first-day listings on rehabbed homes with my first-time homebuyer clients. The move-up buyer has all but disappeared -- too many of them took action in the rush a few years ago and have decided to dig in and wait this slump out. The others who can afford to move up are too nervous and are missing some choice deals. Because of the prices, first-time buyers are getting a lot for their money compared to three to five years ago. As the banks continue to release their shadow inventory and short sales continue to surface, pricing will constantly need to be re-evaluated (by sellers) in the market. On the other hand, I feel that over the next six months you will start to see the market shift from a buyer's market to a seller's market for the homes priced under $225,000. Prices are fairly stable now after substantial declines since late '07. The number of actual sales has been relatively flat when you average the stimulus spike in the second quarter last year, then the hangover in the third and fourth quarters of 2010. The number of listings had also fallen and then balanced out over the past eight quarters. The Salt Lake County condo market has had it worse in the past 12 months. Condo sale are down nearly 30 percent in just one year, and the prices have also fallen 14 percent in that period. This is greatly due to tighter lending standards, with so many relying on FHA financing and countless homeowners associations no longer meeting the strict community approval requirements. The qualified buyer pool for condos has diminished. Cash and conventional loans are now and will be king in condo sales for the next few years. Investors struggle to break in on this action, though, because many communities are limiting the rental ratios in an attempt to regain the coveted FHA Approval. At the end of our second quarter this year we are at $189,000. We have seen a 20 percent decline in the median price. However, we are up from our low this year of $187,000, which happened in the first quarter. The end of the second quarter coincides with our spring selling market, when numbers always spike and then fall off again. They are priced low, and non-short-sale sellers are still frustrated. They are frustrated at the drop of their property value. On the other hand, I have had buyers get amazing deals on short-sale properties. There seems to still be a concern about the banks and their shadow inventory, along with the prices they are selling the homes for. Part of this is due to more agents becoming familiar with the short-sale process and screening listings that will never go short. Also, we have more short sales classified as under contract/pending than ever before. Of course, a very frustrating fact is that only about one-third of these short sales actually close. There are over 11,000 delinquent loans in Salt Lake County, and I see numerous homes each day that are not occupied or, from what I can tell, in any phase of disposition. As far as the REO side, the top (agents working with REOs) seem to be moving through what inventory they do have pretty quickly. There have been some very nice incentives offered this summer, and I have seen many REOs rehabbed prior to bank listing. Items like fresh paint, carpet and new kitchen appliances make a big difference. The sellers I have need to sell, but do not want to sell as a short sale, nor do they qualify for a short sale. I am optimistic that they do have other options, and with the proper guidance can see the benefit of offering their homes with different options, such as a lease option, seller financing or renting. The buyers I have run across are having a hard time qualifying for financing. They either have poor credit scores or a blemish (previous short sale, foreclosure or bankruptcy) on their credit report that won't allow them to qualify for a purchase. That is why I feel investors have a huge opportunity. There are so many potential buyers who need homes but don't qualify yet and still need to rent. I have had a lot of potential sellers who choose to rent their homes instead of selling in this market. Utah and the rest of the country need certainty -- (they need to) know what the tax situation will be, what health care costs will be. Jobs will result in consumer confidence, which will (further lift) consumer confidence, buying and selling. It's all about confidence in the economy and the country's leadership. With that said, with interest rates at record lows we should be writing contracts and closing transactions at a much brisker pace than we currently are. Lack of consumer confidence, lack of certainty, and lack of leadership at the national level is tough to overcome. But the glut of homes stuck in the foreclosure process is a concern. We must work through all of it before we will see real marked change in the statistics and in the consumer's confidence. Don't get me started on the appraisal issues we are dealing with. I am optimistic about the lenders getting better with the short-sale process, using document and communication portals or assigning "single points of contact" to these transactions, which is definitely helping speed the process. More buyers are feeling like we're close to the bottom and feel safe about buying. I'm still selling homes with 100 percent financing. Overall, our market is pretty good, just not values. But it is more important than ever to have a good agent. You really have to do your homework to figure out what things are really worth, and prices can be all over the place. They feature a lot of new construction options and are in an area that continues to grow. Another area that has had strong sales volume is the Taylorsville/Kearns area. This is an area that offers a lot of homes under the $200,000 price point. Most of the homes are "older" but affordable. I see a continued trend of young families purchasing their first homes, and the areas listed above are where they have been drawn. In-migration buyers are generally from the West Coast; however, we do see in-migration from all parts of the country. Young professionals leave the area for better-paying jobs in larger cities. However, we are seeing many big businesses bring operations to our county. People and companies from both coasts, and everything in between, look here for opportunity. This isn't much of a change, other than maybe a slight increase due to less favorable conditions in other markets since the economic downturn, and business-friendly government here in Utah. People are planting seeds in Salt Lake, hoping for a greater return after we achieve economic balance. I think this is key to staying on top of the market and being able to help your clients. I work with all types of sellers, buyers and investors. I recently received my certified distressed property expert designation. In this market it is key to make sure you can help all types of clients, from first-time homebuyers and sellers in distress, to a buyer who wants to purchase a HUD home, to a family relocating to or from the Salt Lake area. You need to be able to help everyone, whatever their needs may be. We have also worked on increasing our REO business, with the caveat that we never lose site of our base business model of our sphere of influence. I am taking on new business opportunities that generate override income by assisting on transactions that are managed by others. I am advertising in a hyperlocal manner and volunteering in many industry and community programs. As more agents leave the business I am being recognized as the trusted resource who is still "in business" and "doing business. They will have to consider lease options, renting and/or seller financing. I feel more and more investors will come back into the market due to the low sales prices and the high demand for rentals. They know what they want and they know what they need. The question is: What impact will the option-ARM (adjustable-rate mortgage), alternative documentation ("Alt-A") and interest-only loans that are resetting have on the REO and short-sale sector. The next 20 years will bring approximately 450,000 new housing units and 700,000 new jobs to northern Utah, according to Arthur C. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News.